I've been thinking about this and wanted other people's take on this. But instead of rebalancing by the share price, does anyone rebalance to keep the number of shares at the right percent?
I'm talking about like 60% VTI, 20% VXUS, 20% BLV (what I use). I'll make up share prices for easy math and to get the idea across. So on a portfolio of 10,000 "total" shares, I would have 6,000 VTI, 2000 VXUS and 2000 BLV. The current portfolio value could go up and down but because I look at shares and not price points, does it make sense that I rebalance by the price? IE: the value of the VTI portion is $6000 and goes up to $8000 so I need to sell of $1000 and give $500 to both VXUS and BLV? Even if the number of shares didn't change in the mean time because I haven't bought/sold anything. But if after a year of investing more money and reinvestments, my bond shares outgrew my stock shares, I could sell like 1000 shares then put 600 shares into VTI and 400 shares into VXUS (or as close to what the price limit would allow).
I'm thinking to look at my allocation based on % shares because I know that for X dividends, I would need Y shares... do I need to look at the $ value of Y shares? Or is the dividend proportional to the share price? I thought it was kind of like bonds too, in that the company would pay say 50 cents per share no matter if the share was $5 or $10. I mean I know that a increased dividend is reflected in the share price, but if I was looking only for the monthly payments, does it really matter what the price is if I know what the dividend for each share is and calculated how many shares I would need?
I'm not trying to get into a dividend vs growth discussion, just wondering if I could just look at share numbers for figuring the portfolio allocations.
I haven't been investing long enough to need to "rebalance" :( I need more money to invest lol, give me 15-20 years :( so I'm just thinking of future strategies for when I do. So far my rebalancing is just putting in more money into the part that isn't aligned right.